Science Fiction Author, Freelance Writer and Researcher

Gershenkron and the Positives of Backwardness

Alexander Gershenkron (1904-1978) argued that backwardness could have a relatively positive economic role in late industrialising nations.[1] Backwardness, in Gershenkron’s sense of the word, is a state in which a country’s industry is behind that of other nations. He argued that this would lead to a number of conditions occurring during industrialisation: institutions would change to accommodate industrialisation, state intervention would occur to compensate for the relative scale of backwardness, industry would focus on capital intensive heavy production, and there would be a reliance on borrowed technology.[2]

Gershenkron’s ideas were formed in his observing late European Industrialisation.[3] Even so, his theories have been used in the context of industrialisation in East Asia to explain their rapid advances. Despite the merit of Gershenkron’s theories, this is not a good system to describe East Asian industrialisation. While it explains some aspects of East Asian industrialisation, many aspects differ. This is most prominent in the differing cases of labour and the state.

This essay will show that Gershenkron’s views cannot be completely applied to the East Asian context.

Gershenkron’s theory on capital intensive industry does not apply to East Asia as a result of their focus on labour intensive industry. Gershenkron argued that late industrialisers, due to a low skilled labour force, would have to focus on capital intensive industry.[4] This was not the case in East Asia, which had access to skilled, cheap labour.[5] Unlike Britain, East Asian nations did not have access to large amounts of capital, so could not have pursued capital intensive tactics. Specifically in Japan (but relevant throughout East Asia), skilled labour led to industrialisation, eliminating the need for capital substitution.[6] In South Korea, light-industry and exports were focused on and allowed due to a cheap labour force.[7]

Gershenkron’s capital intensive, heavy industry was not seen in East Asian industrialisation; this was due Asian nations’ lack of capital and abundance of cheap, skilled labour.

Gershenkron’s view that the state would need to intervene to promote industrialisation can be seen in limited degrees in the East Asian context. Gershenkron argued that initial disadvantages of late industrialisers would need to be addressed by institutions and the state.[8] It is true that in Japan, the state had to intervene by eliminating semi-autonomous ‘feudal’ domains and promoting communications and banking.[9] The latter, especially, is needed in heavier industrialisation as it gives access to capital for economic growth.

Despite this, many Japanese scholars argue that light, cottage industries accounted for more of the national output than heavy industry. In fact, it was only by the eve of World War 2 that heavy industry trumped traditional industry.[10] In this regard, state-run heavy industry was not integral to Japanese industrialisation.

In Japan, state enterprises often failed, only becoming successful after privatisation in the 1880s.[11] The cause of a breakthrough in industrial output, cotton-spinning, was actually a private sector initiative.[12] Even with heavy state-involvement in some industries (steel and railroads), the private sector was larger and performed better.[13] Despite this, state industries were prime spreaders of advanced technology and can be seen as necessary in the dissemination of new production methods.[14]

Ultimately, the government’s main role in Japanese industrialisation was facilitating institutions and formulating a favourable environment for the private sector.[15] This fulfils Gershenkron’s predicted condition of the need for institutions to create a favourable environment for industrialisation.

As can be seen, state involvement in early Japanese industrialisation was not as integral as it was later in South Korea.[16] In this regard, Gershenkron’s views on state intervention have limited applicability, due to the diverse case studies.

This essay has dealt with two aspects of Gershenkron’s views compared to East Asian industrialisation. The use of labour intensive rather than capital intensive industry, and the mixed use of state intervention in varying nations reveals that the Gershenkron model is not completely applicable to the Asian context, but does contain some predicted conditions. In terms of the major differences, Gershenkron’s model predicted heavy, capital intensive industry while the Asian model used light, labour intensive industry. State intervention’s necessity and scale in industrialising Japan is up for debate, but this essay finds that the comparison is limited.

This essay was unable to deal with all aspects of backwardness in relation to Asian industrialisation. Technology and its dissemination is another important aspect of industrialisation that could not be explored, but leaves room for further study.

Ultimately, this essay found the Gershenkron model only to have limited applicability in the East Asian context.

[13] Ibid.,26, only the war shifted production under state control, but this can be viewed as a negative, as production was focused on military pursuits (which are transient) rather than long-term economic growth and prosperity. Erikson writes about the net loss of the war on page 27.